Nielsen Globalfaces March 2009


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Nielsen Globalfaces March 2009

  1. 1. March 2009Global Faces andNetworked PlacesA Nielsen report onSocial Networking’sNew Global Footprint INSIDE: Social networks/ blogs now 4th most popular online category – ahead of personal e-mail These sites account for one in every 11 minutes online Orkut in Brazil has the largest domestic online reach (70%) of any social network anywhere in the world Facebook has the highest average time per visitor amongst the 75 most popular brands online worldwide
  2. 2. IntroductionHow social networks are creating and advertisers to connect with theira potentially transformational audiences. So how do they need to Report Highlights change their strategies accordingly?change in consumer behaviour 1. Putting the growth of social Consumer engagement within socialSocial Networking has been the global networks – popularity and networks has the potential to changeconsumer phenomenon of 2008. engagement – into context the way consumers are targeted, notTwo-thirds of the world’s Internet just through the digital medium, but 2. How the audience to socialpopulation1 visit a social network or through all forms of traditional media. networks is changingblogging site and the sector now Whilst a few billion dollars of ad revenue 3. The challenges facingaccounts for almost 10% of all internet can’t be wrong, the prevailing wisdom is advertisers on social networkstime. ‘Member Communities’2 has that the current level of advertisingovertaken personal Email to become the 4. What advertisers can do to activity on social networks isn’tworld’s fourth most popular online find the magic formula for consummate with the size – and highlysector after search, portals and PC advertising in social networks engaged levels – of the audience. Thesoftware applications. social networks and advertising industry 5. Factors contributing to theThe story is consistent across the world, haven’t quite yet found that magic Facebook phenomenon‘Member Communities’ has taken a formula to make this happen.foothold in every major market from 6. Why localisation has won the The industry is faced with a real ‘Catch-22’ day in many countries50% of the online population in Switzerland situation. Part of Facebook’s extraordinaryand Germany to 80% in Brazil. Facebook 7. Where mobile social networking subscriber growth is due to a cleanhas become the largest player on the has taken the greatest hold design with little advertising clutter;global stage, dominant in many countries, consequently, the audience growth 8. What ‘traditional’ publishersyet localised offerings have won the day hasn’t been accompanied by a similar can do in the face of the socialin many others. surge in advertising revenue. On the network phenomenonHowever, the growth in popularity of other hand, MySpace’s more customisablesocial networks – and the resultant entertainment and content-orientedbroadening audience – is only half the offering – carrying more advertising –story. The staggering increase in the has been more successful at attractingamount of time people are spending on advertising revenue, yet MySpace’sthese sites is changing the way people audience is flattening. The industry willspend their time online and has be watching very closely at which one oframifications for how people behave, these fundamental differences in strategyshare and interact within their normal will prove the most successful indaily lives. attracting advertising revenue in 2009.Consequently, the global media and This report puts the global socialadvertising industries are faced with new network phenomenon during 2008 intochallenges around the opportunities and context, providing insights and lessonsrisks this new consumer medium for the networks themselves, advertiserscreates. Social networks provide and the media industry on how to takecompetition to traditional publishers for advantage of what’s happening onlineconsumer attention and at the same around “Global Faces and Networkedtime, facilitate new ways for publishers Places”.1 In this report, the terms ‘Global’ or ‘World’ encompass the following countries in which Nielsen Online has a NetView panel – USA, Brazil, United Kingdom, France, Germany, Italy, Spain, Switzerland and Australia. (Whilst Japan figures are shown in certain graphs, Japanese data isn’t included in any global figures.)2 Nielsen Online’s ‘Member Community’ category includes both social networking and blogging websites.1Copyright © 2009 The Nielsen Company
  3. 3. Social network and blogging sites Figure 1: Member Community growth twice that of any of the other fiveare now the fourth most popular most popular sectorsactivity on the Internet Global1 Global1 % Point‘Member Communities’ now reach over Active Active Increase in Rank Sector5 percentage points more of the Internet Reach Reach Activepopulation than it did a year ago – a Dec 08 Dec 07 Reachgrowth rate more than twice that of any 1 Search 85.9% 84.0% 1.9%of the other four largest sectors. 2 General Interest Portals & Communities 85.2% 83.4% 1.9%The strongest growth has come in 3 Software Manufacturers 73.4% 72.0% 1.4%Germany where the sector now reaches51% of Germans online compared to 4 Member Communities 66.8% 61.4% 5.4%39% a year ago – an actual increase of 5 E-mail 65.1% 62.5% 2.7%over 12 percentage points. Source: Nielsen Online, Global Index, December 2007 – December 2008. E.g. In Dec 08 the Search sector reached 1.9% (points) more of the world’s online population than it did in Dec 07Large growth has also occurred in the 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA onlyUK, Spain, Italy and Switzerland – thesector reaching 10% percentage points Figure 2: Germany has seen the greatest increase in online reach ofmore of the online population in each of Member Community websitesthese countries than it did a year ago. 80% 1.4% 75% 73% Dec-08 Germany arrives later to the 67% 9.9% 9.9% 70% 2.7% 69% 67% 67% Dec-07 social network party 5.4% 10.3% 2.6% 2.9% 59% 4.9% Natural German reserve when it comes 51% 51% to disclosing personal data resulted in 9.6% social networking taking off later than in 78% 12.5% most other countries. As in many 78% 67% countries, younger people were the first 61% 65% 63% 59% 64% 64% 55% in Germany to embrace social networks. However, the activity is starting to 39% 41% spread to the wider online population due to sites like “Wer-kennt-wen”, literally translated as “Who Knows Whom.” Including neighbourhood al il* ain ly n UK A ce lia y* d* communities and job-related networks, Gl ob Br az Sp Ita Ja pa US Fr an stra an lan Au r m er itz 1 “W-k-w” addresses a more mainstream Ge Sw audience than previous dominant players such as StudiVZ, which targets students. Source: Nielsen Online, NetView, Home and Work Data, December 2007 – December 2008 (*Home only). E.g. In Dec 08 ‘Member Communities’ reached 67% of the global online population compared to 61% in Dec 07 Takeovers by big traditional media 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only (JP figure not included in Global figure) companies – bringing significant investment and management experience – have also helped bring Facebook has started to make a bigger as local players already had a significant social networking to a wider audience. impression since launching a German head start. In fact, StudiVZ, started in Publisher Holtzbrinck bought StudiVZ language interface in March 2008 – the last 2006, was so similar to Facebook that (within eight months its audience grew six months of 2008 saw the site triple its Facebook sued it in a Californian court in by 168%) and after TV network RTL, a audience to over 2.4 million Unique Visitors. 2008, alleging that StudiVZ copied its look, subsidiary of media giant Bertelsmann, feel, features and services. StudiVZ denied bought “W-k-w”, its reach tripled However, Facebook is still only the sixth the claims. within a year. most popular social network in Germany 2 Copyright © 2009 The Nielsen Company
  4. 4. Time spent on social network and Figure 3: The total amount of time spent on Facebook increased by 566%blogging sites growing at over 3xthe rate of overall Internet growth Change in total minutes between Dec 07 and Dec 08This increase in popularity is only halfthe story when it comes to the social All Internet 18%networking phenomenon – the timepeople spend on these networks is alsoincreasing dramatically. Member Communities 63%The total amount spent online globallyincreased by 18% between December2007 and December 2008. In the sameperiod, however, the amount of time Facebook 566%spent on ‘Member Community’ sitesrose by 63% to 45 billion minutes; and Source: Nielsen Online, Global Index, December 2007 – December 2008on Facebook by a massive 566% – from 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only3.1 billion minutes to 20.5 billion. Facebook’stime is so high due to being the ninth Figure 4: Switzerland has seen the greatest increase in share of timemost popular brand online and having accounted for by Member Community websitesthe highest average time per person(three hours 10 minutes) amongst the Member Community Member Community Relative Change Country75 most popular brands online worldwide. Share of Time Dec-07 Share of Time Dec-08 in % Share Global1 6.7% 9.3% 38% Switzerland* 3.0% 9.3% 207% Germany* 3.1% 7.5% 140% UK 8.0% 17.4% 118%Consequently, social networks andblogs are eating into the share of Italy 7.2% 15.4% 113%time held by other sectors Spain 6.7% 12.5% 87%Because time spent on social networks is France 4.0% 6.3% 59%growing at a dramatically faster rate Australia 6.9% 10.9% 58%than the Internet average, socialnetworks are gaining a larger share of all USA 5.8% 6.4% 11%Internet time. In most of the countries Brazil* 24.4% 23.1% -6%monitored the share of time accounted Source: Nielsen Online, NetView, Home and Work Data, December 2007 – December 2008 (*Home only)for by ‘Member Communities’ has more E.g. Between Dec 07 and Dec 08 the share of time accounted for by ‘Member Communities’ globally increasedthan doubled. In Switzerland, for from 6.7% to 9.3% - a relative increase of 38%example, the share of time has tripled 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA onlyfrom 3% to 9.3%.A year ago ‘Member Communities’ Like social networking, the Video and As the online industry matures and theaccounted for one in every 15 online Online Games sectors have also seen value of online real-estate is increasinglyminutes globally – now it accounts for strong increases in share of time and it measured by time spent, rather thanone in every 11. In Brazil alone, ‘Member seems that the biggest casualty of these pages viewed, a significant shift inCommunities’ accounts for almost one increases has been Instant Messaging – advertising revenue from ‘traditional’in every four minutes. In the UK they another ‘communications’ sector that online media towards social media couldnow account for one in every six minutes has struggled to attract ad revenues be realised – if the successful ad model(up from every 13 minutes a year ago) consistent with the level of online time it can be found.and in Italy one in every seven (up from accounts in 14 a year ago).3Copyright © 2009 The Nielsen Company
  5. 5. The social network audience is Figure 5: Facebook’s greatest growth in global1 audience numbers hasbecoming more encompassing come from people aged 35-49As an entity moves from being niche to a 14major player the composition, ormake-up, of its audience changes. Social 12 12.4 Male Female 11.9 11.7networks online started out amongst Increase in Unique Audience (millions) 10.9the younger audience. However, as the 10networks have become more mainstreamwith the passage of time, it isn’t surprising 8 7.6to see the audience becoming broader 6 6.0and older. This shift has primarily beendriven by Facebook, whose successful 3.7 4 3.6formula (page 9) opened up thepossibilities of social networking to a 2 1.9 1.3much wider audience.In terms of sheer audience numbers, for 0 2 - 17 18 - 34 35 - 49 50 - 64 65+example, the greatest growth forFacebook has come from people aged Source: Nielsen Online, Global Index, December 2007 – December 2008. E.g. Between Dec 07 and Dec 08 there35-49 years of age (+24.1 million). was a 3.7 million global increase in the number of 2-17 year old males visiting FacebookFurthermore, Facebook has added 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA onlyalmost twice as many 50-64 year oldsvisitors (+13.6 million) than it has added Figure 6: The audience composition of Member Community websites isunder 18 year old visitors (+7.3 million). shifting from the young to the oldConsequently, people under 18 years old 8% 7%are making up less of the social network 6%and blogging audience, whereas the 50+ age Change in Unique Audience Composition 4%group are accounting for more of the 4%audience. 2% 2% 0% -2% -1% -4% -6% -8% -10% -9% 2-17 18-34 35-49 50-64 65+ Source: Nielsen Online, Custom Analytics, December 2007 – December 2008. E.g. Between Dec 07 and Dec 08, the share of the online global1 audience to ‘Member Community’ sites accounted for by 2-17 year olds decreased relatively by 9% 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only Facebook started out as a service for university students but now almost one third of its global audience is aged 35-49 years of age and almost one quarter is over 50 years old. In the UK, for example, if the average month-on-month audience changes over the last six months were to continue; by mid-June 2009 there would be as many 35-49 year olds on Facebook as 18-34 year olds. The changing audience offers advertisers the opportunity to use social networks as a vehicle for targeting all demographic groups. In Italy, brands such as Maserati – traditionally marketed to an older audience – now have fan pages on Facebook. 4 Copyright © 2009 The Nielsen Company
  6. 6. Challenges facing advertisers onsocial networksTo realise this opportunity to use social are less inclined to accept advertising A Nielsen Online survey in Australianetworks as a vehicle for targeting all around it. A well used analogy is that showed that the challenge could bedemographic groups, challenges have to advertising on a social network is like getting more difficult because consumersbe overcome. The current level of gate-crashing a party. are actually growing less tolerant toadvertising activity on social networks advertising on social media. The study This is compounded by the fact theisn’t consummate with the size – and showed that in December 2008, 38% of content supplied by the social networkhighly engaged levels – of the audience. Australians online considered advertising members is also of a highly personal on social networking sites to be anA key reason why advertising on social nature. This provides another “Catch-22” intrusion compared to 29% the yearnetworks hasn’t been as successful as on situation for the social networks in that before. Furthermore, those who didn’tthe more ‘traditional’ publishers is personal data is potentially one of their mind being served ads if they werebecause social networkers serve a dual most valuable assets – highly attractive relevant to their interests droppedrole as both the suppliers and consumers to advertisers – yet it provides a major slightly from 51% to 47%.of content. In the traditional model they obstacle in generating revenue. As thesimply consume the content supplied by site becomes more attractive to advertisersthe publisher. Therefore, members have it becomes less appealing to membersa greater sense of ‘ownership’ around who see highly-targeted ads as invadingthe personal content they provide and privacy. Nielsen Social Media Resources Nielsen Online has a number of social media resources to help you make sense of and keep you updated with what’s happening in the social media space and all areas of the online industry: Analyst Blog “Connecting the Dots” is a resource for research, insights and commentary on the digital world – including consumer behaviour, industry trends and breaking news – all grounded in world-class data and our deep experience with the world’s top brands. Join us in connecting the dots with your comments and feedback. BlogPulse BlogPulse is a blog search engine that analyzes and reports on daily activity in the blogosphere. An automated trend discovery system for blogs, it applies machine-learn- ing and natural- language processing techniques to discover trends in the highly dynamic world of blogs. Twitter - Pete Blackshaw, EVP, Digital Strategic Services - Alex Burmaster, Communications Director, UK & EMEA - The Nielsen Company Micro-blogging on data, insights, ideas, lessons and trends across the global digital universe. S.M.A.R.T. The Social Media and Advocacy Roundtable is an exclusive forum for Nielsen clients and analysts to discuss digital best practices.5Copyright © 2009 The Nielsen Company
  7. 7. What can advertisers and their the fore as the ultimate form of advertising the more successful examples of socialagencies do? at a time when traditional advertising is network marketing that touch on the suffering from a major lack of trust. principles of interactivity and addingWork with the networks more closely Nielsen’s analysis of social media value – such as offers, sneak previewsThe social networks and advertisers have conversations back in 2007 and again in and co-creation of content.compatible interests. The networks need December 2008 showed that ‘false’ was Social networks lend themselves greatlyadvertisers to monetise their audience the term most closely associated with to generating brand affinity for advertiserseffectively. Advertisers need the networks “advertising”. through these fan sites, which, inas they have to go where consumers are Social media has fanned the flames of essence, act as advertising. For example,spending more of their time. Both parties consumer distrust about advertisers at the time of writing, Facebook’swill reap significant rewards if they can claims. However, at the same time social “Addicted to Starbucks” group hasdiscover the magic recipe for advertising media has provided the motive, opportunity almost 124,000 members, over 670successfully on social networks – but and means for advertisers to engage discussion topics and almost 10,000 wallthey will need to work together to consumers in a more open and honest way. posts. However, the challenge fordevelop it. advertisers is that discussions within these Advertising should be about adding valueNew approaches to the ad model are groups won’t necessarily align itself withrequired for this challenging and Social networks are ultimately about the brand-designed messaging. Muchcomplex arena friendships, where members add value to like a friendship, marketing on social each other’s lives through interaction. networks requires continual investmentIt will take time to work out the magic Therefore, advertising should follow theformula for successfully advertising in – in terms of time and effort as opposed same philosophy of adding value through to financial – to be of value to bothsocial networks. The diversity and interaction and consultation. Fan sites orpersonalised nature of the environment parties. sponsored groups are, perhaps, one ofmeans standard ad models – such ascontextual search and standard unit sizes– won’t cut it. Different approachesacross ad units and ad inventory will Figure 7: ‘False’ is the term most closely associated with advertisinghave to be tried, involving a trial anderror mindset. As mentioned above, a Advertisingcloser relationship between the social Price Deal campaignnetworks and advertisers is required to Customers Costs Market Quality negative associationsmake this happen. Consumers Products Sales Buy See stakeholders Quote platforms OnlineAdvertising must be a conversation Product Business People Websiterather than a push modelThe point that social network members Internetare co-creators of content and, therefore, Agency Marketing Free advertisinghave a sense of ownership within the site Advertising campaign False advertisingmeans advertising should be about ADVERTISING Advertising revenue Promoteparticipating in a relevant conversation False TV advertising Advertising companywith consumers rather than simply Misleading Buy One Get One Free Sell advertising Media Commercial advertisingpushing ads on them. After all, it is social Advertised price Ads Cost of advertisingmedia. Advertising shouldn’t be about Adverts Commercial Televisioninterrupting or invading the social Adwords Channelsnetwork experience, it should be part of Billboardsthis conversation. Broadcasters Newspapers MagazinesThe tone of advertising must be moreauthenticMessaging within advertising shouldcome from a more authentic, candid and Source: Nielsen Online, BuzzMetrics, September 2008 – December 2008. E.g. in English-language online social media conversations ‘false’ is the term most closely associated with advertisinghumble perspective. Social media has,once again, brought word of mouth to 6 Copyright © 2009 The Nielsen Company
  8. 8. Generating ad revenue – the MySpace story Although Facebook has come some Figure 8: MySpace and Bebo attract more advertising activity in the way towards delivering a promise of UK than Facebook despite having a smaller audience targeted ads within a mass network, MySpace’s more focused overall Facebook MySpace Bebo offering seems to be proving more fruitful at the moment. 2,036 MySpace is smaller globally than Facebook and, outside the US, is 1,592 considered more of a niche player because of its more focused targeting 1,246 towards teenagers and young adults 982 through the vehicles of entertainment 799 639 – encompassing music and video – 530 467 451 and self-expression (decoration options allow profile pages to be highly customisable). Average Monthly No. of Advertisers No. of Campaigns Reports estimate that in 2008 Audience (10,000s) Facebook earned around $US300 million in ad revenue compared to Source: Nielsen Online, AdRelevance and NetView, UK, 2008. around $US1 billion for MySpace. If E.g. Facebook averaged 12.46 million Unique UK Visitors per month in 2008 and during the year had 451 Facebook has made a conscious choice advertisers who ran a total of 982 display ad campaigns to go for the quantity vs. quality strategy it has yet to overtake MySpace in the all-important revenue metric. Facebook’s (12.5 million) yet managed to Figure 9: Mobile network Whilst part of Facebook’s huge appeal attract almost one and a half times as operators were the most active is the simple layout of an interface many advertisers (639 to Facebook’s display advertisers on MySpace that carries very little ad inventory, 451). At an arbitrary base level, Facebook UK in 2008 MySpace’s offering possibly makes its attracted 0.36 display advertisers per inventory – of which there is a lot Unique Visitor, Bebo attracted 1.37 and MySpace UK No. of Rank more compared to Facebook – easier MySpace attracted 1.51 advertisers per Advertisers Campaigns to monetize, particularly in terms of Unique Visitor. 1 T-Mobile 46 immersive advertising. Bebo, also MySpace has also benefited from its carrying more inventory than Face- 2 O2 42 acquisition by News Corp and being book, has also done well in this regard assimilated into the Fox Interactive 3 Vodafone 42 by targeting teenagers and young Media stable – together with sites like 4 PC World 40 adults through music and celebrity. Photobucket, IGN, Rotten Tomatoes and AskMen – which has provided MySpace 5 Orange 29 Facebook is more focused on the “traditional” social networking with one of the most mature and 6 27 component of communications, while successful display ad models within the social network space today. 7 Sky 26 sites like MySpace and Bebo are more focused on the entertainment content In the UK, mobile network operators – 8 Virgin Media 22 component. From an advertising such as T-Mobile, O2 and Vodafone – and 9 Pogo 20 perspective, it has been a moot point media companies such as Sky and Virgin that monetizing content is easier than – dominate the most active advertisers 10 Halifax 16 monetizing communications, which on MySpace. Personal communications Source: Nielsen Online, AdRelevance, UK, 2008. gives sites like MySpace and Bebo an and entertainment are extremely E.g. T-Mobile ran 46 different display ad advantage For example, in the UK relevant for sites such as MySpace whose campaigns on MySpace UK during 2008 across 2008, Bebo’s average monthly audience is ultimately there to Unique Audience (4.7 million) was communicate and interact with friends almost one-third the size of in an entertaining and personalised way.7Copyright © 2009 The Nielsen Company
  9. 9. Facebook has replaced MySpace Figure 10: Facebook and LinkedIn have experienced large relativeas the world’s most popular social increases in global1 online reachnetwork Global1 Relative Active ActiveThe global rise of social networks in Unique Change in Rank Social Network Reach Reach2008 has primarily been driven by Audience Active Dec 08 Dec 07Facebook, which overtook MySpace to (millions) Reachbecome the world’s most popular social 1 Facebook 108.3 29.9% 11.1% 168%network. 2 MySpace 81.0 22.4% 23.0% -3%Less than four years after Harvard 3 Classmates Online 19.7 5.5% 3.9% 40%student Mark Zuckerberg foundedFacebook in February 2004, its rapidly 4 Orkut 17.5 4.9% 4.6% 7%soaring popularity saw it included in the 5 LinkedIn 15.0 4.2% 1.8% 137%2008 edition of the Collins English Source: Nielsen Online, Global Index, December 2007 - December 2008.Dictionary (as a noun and a verb). E.g. In Dec 08, 108.3 million people (30% of the world’s Internet population) visited Facebook. Facebook’sFacebook is now visited by three in every online active reach has increased, relatively, by 168%, from 11.1% to 29.9%ten people online across the world. 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA onlyIt has been a mixed year for the leadingplayers in terms of their global footprint. Figure 11a: The most popular social networks in countries whereFacebook (168% relative increase) and Facebook is the leaderLinkedIn (137%) have seen huge Rank Australia Spain Switzerland* France UK Italyincreases in reach. Classmates Onlinehas also seen strong growth, whilst 1 Facebook Facebook Facebook Facebook Facebook FacebookOrkut and MySpace‘s reach has stayedfairly consistent. L’Internaute 2 MySpace Tuenti Netlog Copainsdavant MySpace MySpace 3 Bebo MySpace MySpace MySpace Bebo Netlog Is the Italian Government the only thing stopping Facebook? The issue of low productivity in the Figure 11b: The most popular social networks in countries where Italian workforce has been taken on Facebook isn’t the leader by the Minister for Public Adminis- tration. Last year Renato Brunetta, Rank Brazil* China Germany* Japan USA declared war on the “fannulloni” – 1 Orkut 51 Wer-kennt-wen Mixi MySpace sluggards – of the Italian public sector workforce, achieving a near 50% drop in the number of sick 2 Sonico Xiaonei StudiVZ Lococom Facebook days within a few months. Facebook is also a target and Italian companies, Classmates 3 MySpace Chinaren MySpace Kanshin-kukan both public and private, are Online blocking access to the site – Poste Source: Nielsen Online, NetView, Home and Work Data, December 2008 (*Home only). Italiane (the Italian mail service) E.g. Orkut is the most popular social network in Brazil. being the first to do so in November 2008. However, there are ( = domestic social network) compromises – employees within the Naples municipality are allowed an hour per day on Facebook. 8 Copyright © 2009 The Nielsen Company
  10. 10. Why Facebook has become the Figure 12: Facebook has the greatest online reach in the UK and Italyworld’s most popular social network ( = Facebook not the most popular social network in that country)Based on a simple design, broaddemographic appeal and a focus onconnecting, Facebook has become the 47%most popular social network in the 44%majority of countries measured by 38%Nielsen Online. It has the greatest reachin the UK, being visited by 47% of 33%Britons online, and actually has a greater 30% 29% 28% 27%online reach in both Italy (44%) andAustralia (38%) than it does in itscountry of origin - the USA (33%). Overcoming privacy issues 6% quickly 2% 0.5% Occasionally it seemed the only thing n al UK ly lia A ce n * y* il* nd pa ai US that could stop Facebook’s meteoric rise Ita ob an az an tra Sp la Ja Br Gl rm Fr s 1 er Au was how it dealt with its members’ data. Ge itz Sw Facebook’s u-turn in February 2009 on retaining users’ content and licenses after they terminated their account Source: Nielsen Online, NetView, Home and Work Data, December 2008 (*Home only). E.g. 30% of the world’s online population visited Facebook in Dec 08 came after protests from members and 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only (JP figure not included in Global figure) uproar in the blogosphere. Facebook also incurred the wrath of its Factors contributing to Facebook’s Architecture. Inventive features (including members over the Beacon advertising rapid growth applications, invites, requests) and open system that sent information about architecture - including the masterstroke Design. An organized, simple and to open the platform to applications members shopping habits and activities easy-to-use interface – with much less developers – have increased word-of- on other websites to Facebook – mainly advertising compared to many of its mouth and visitor engagement. to allow targeted ads to be served on competitors – is likely to appeal to a Facebook. This caught many members Privacy. Members have more control wider audience. off guard and, after initially defending over who sees their content than in the system, Facebook backed down to Broad appeal. Facebook isn’t targeted many other networks where non- allow members to opt out of it. towards a specific demographic like many members can access personal content – other players (e.g. StudiVZ to students or a concern for many people. In September 2006 the “News Feed” Bebo to young adults) – ironic considering feature that allowed members to track Media coverage. Facebook’s early that it started out as a network for their friends’ Facebook movements was momentum was given a huge boost due university students. greeted by protests that numbered in to the large amount of free media the hundreds of thousands of people Activity Focus. Facebook is focused on coverage it received. within a day. Within 48 hours of the connecting as opposed to entertainment. roll-out Zuckerberg had openly stated It can be used for multiple networking the site had “messed up” and improved activities – reuniting old friends, business the privacy controls. networking, dating, sharing photos, status updates. Facebook is Reunion, Facebook has now given members LinkedIn, Yahoo! Personals, Flickr and comment and voting rights over Twitter all in one. Facebook’s future policies on how the site is governed.9Copyright © 2009 The Nielsen Company
  11. 11. First-mover advantage and Figure 13: Music is a major difference in discussions around Facebooklanguage have kept Facebook at and MySpacebay in some countries 30% Facebook MySpaceAlthough five years old, Facebook only 27%came to global prominence in the last 25%two years, allowing time for other social 22%networks to take a strong hold. Creating % of online social media postsa local infrastructure on the ground to 20% mentioning the network 20%establish a relevant local offering 17% 17%tailored to the nuances of the domesticmarket has been enough to keep 15% 14%Facebook at bay in some countries. In 12%Germany, for example, local player 10% 10% 9%Wer-kennt-wen is twice as popular as 8% 7%Facebook. In Japan, Mixi is around 27 6% 5%times more popular than Facebook and, 5%in Brazil, Orkut is 29 times more popular. 2%Brazil: the Orkut phenomenon 0% Friends Profile Photos Music Problems Video ApplicationNamed after its creator, Googleemployee Orkut Büyükkökten, Orkutappeared in 2004 and students in major Source: Nielsen Online, BuzzMetrics, December 2008. E.g. In Dec 08, 22% of English-language online social media posts citing Facebook mentioned friendsBrazilian cities started to distributeinvitations for fun to see if they couldmake Orkut more popular in Brazil than USA: MySpace’s mass-market appeal Its music offering, MySpace Music, is aits native USA – something they key differentiator and remains a hugesucceeded in doing. Orkut is the most MySpace had already gained a draw in the US, being used by almostpopular social network in Brazil but also significant following in the US by the every major music act in the countrythe country’s third most popular site. time Facebook appeared on the scene. which keeps the content fresh andHalf of the Brazilian Internet population Furthermore, Facebook earned an early people coming back. Music’s importancevisited Orkut in September 2005 and reputation as an exclusive service due to for MySpace versus Facebook is shownthe figure is now 70% – the largest its birth within the elite northeast though an analysis of social mediadomestic reach of any social network college sector. This stalled growth within conversations - music is the biggestanywhere in the world. the mainstream US market that difference between topics discussed. It’s MySpace appealed to. The US perceptionFacebook barely registers a blip in Brazil mentioned in 20% of posts about of Facebook and MySpace is a reversal ofcompared to Orkut – being visited by MySpace compared to just 7% in posts the situation internationally, wherejust over 2% of Brazilians online. It’s not about Facebook. Facebook is perceived as mainstreaminconceivable that if Facebook had and MySpace as being more focused This has, so far, managed to keepstarted a few months later, Brazilian around a younger demographic through MySpace ahead. However, at currentstudents would have taken it on as their entertainment and self expression. audience growth rates, Facebook (145%pet project and Facebook would have growth from December 2007 – Decemberbeen the ‘Orkut of Brazil.’ Facebook only MySpace had established itself as an 2008) is set to overtake MySpace (3%launched a Portuguese version for entertainment portal rather than just a growth) in January 2009.Brazilians in December 2008. pure social network. 10 Copyright © 2009 The Nielsen Company
  12. 12. China: a different cultureA host of established domestic socialnetworking players added to the Figure 14: China’s most popular social networksdifferent culture, language and theregulatory issues of doing business in Average Weekly Unique Browsers in Rank Social NetworkChina are the main reasons why the US December 2008social networks aren’t dominant here. By 1 14.0the time the US networks arrived, localplayers such as Xiaonei; the portal QQ 2 9.5and had achieved dominance in 3 7.0key demographic groups. Although many 4 3.5of the domestic social networks are verymuch based on the US offerings, their 5 2.0success was originally based on having 6 1.0partnerships with the portals whichprovided them with an audience base. 7 1.0Succeeding in China takes more than 8 1.0producing a translated version; it requires 9 0.9investment in a local infrastructure and a 10 0.8mentality of running a Chinese socialnetwork that understands the domestic Source: CR-Nielsen China, NetRatings, December 2008. E.g. In Dec 08, was visited by an average of 14.0 million Unique Chinese Browsers each weeknuances of social network behaviourrather than simply rolling out a genericsocial network in Chinese.Japan: the language barrierA localised offering is essential to Whilst Facebook has a good following Furthermore, networks have to becracking the Japanese market and getting amongst Japan’s international community adapted for the enormous domesticanywhere near the utter dominance of and its strength in privacy will appeal to mobile Internet market. Part of Mixi’sMixi. Facebook only launched its the native Japanese way – Mixi is an dominance is down to the cleverJapanese language version in May 2008 invite only system – previous US companies integration of its mobile and PC offeringand did so without any major form of have fallen short because of a lack of local – its mobile version was launched ininvestment in the country – it didn’t set leadership and a ‘humble’ mindset that September 2004 and offers virtuallyup a local office and the translated acknowledges being big in the US doesn’t identical functionality to the PCversion was done by volunteer members. automatically mean being big in Japan. interface.11Copyright © 2009 The Nielsen Company
  13. 13. Mobile Social Networking is Figure 15: Social networks have the greatest mobile web reach in the UKTaking Off and USAs Mixi in Japan shows, the increasingpopularity of social networks has Unique Mobile Internet Audience (000s) Q4 2008resulted in increasing demand to accessthem on the move. Mobile is a natural fit 1,961for social networks, as consumers areused to connecting with friends via 10,618mobile calls and text. Using the phoneto access social networks doesn’t requiremuch change in consumer mindset.Subscribers access social networks ontheir mobile through three primary 773means: by browsing over mobile Web, 22.7% 865 401through downloaded applications and 19.2%by SMS (text-messaging). 485UK mobile web users have the greatest 12.3%propensity to visit a social network 10.6% 10.6%through their handset with 23% of them 6.6%(2 million people) doing so, compared to19% in the US (10.6 million people). Thenumbers of people doing so are a big UK US France Italy Spain Germanyincrease on last year – 249% in the UKand 156% in the US. Source: Nielsen Online, Mobile Media View, Q4 2008. E.g. 23% of UK Mobile Web users (1.96 million people)The most popular social networks via visited a social network through their mobile phone in Q4 08PCs/laptops tend to be the most popularvia mobile too. Facebook is the mostpopular in five of the six countries whereNielsen measures mobile activity – onlyXing in Germany bucks this trend.Mobile applications for handsets such asApple’s iPhone are playing a substantialrole in the expanded mobile use of thesenetworks. Soon after the launch of the3G iPhone, Facebook, with one of themost popular iPhone applicationsavailable, surpassed MySpace in mobileusage in the U.S.SMS (text message) is the third wayusers can interact with their socialnetworks on the go. Primarily used for“status updates,” users can register aphone to send text message postsdirectly to their user profile. By the endof 2008, Nielsen estimated that almost3 million U.S. mobile users were textingFacebook on a regular basis. 12 Copyright © 2009 The Nielsen Company
  14. 14. What can publishers do?Understand that social networks are an Instant Messaging has been a casualty of These early trends potentially indicateopportunity for everyone social networking in terms of a falling that online usage is complementing, not share of online time yet Windows Live substituting, traditional televisionSocial networks are a communication Messenger, for example, has almost one viewing. Social networks and TV,channel just like TV, newspapers, radio million Facebook fans - around which a therefore, might be a mutually reinforcingand the telephone. Therefore, social whole community of discussions take media as the level of twittering (updatesnetworks are just another vehicle by place. It’s quite feasible that the falling sent through the micro-blogging servicewhich any company with an offering, share of time for IM could be more Twitter) during the recent Oscars proved.product or service can use to communicate, pronounced without this form ofengage and connect with consumers. participatory advertising in social Whatever the successful ad model turns networks. out to be in social networks – copy itTap into what makes social networkssuccessful Success in social media advertising Think about the mutual relationship means overcoming obstacles such asPublishers have the opportunity to with social networks and other media complexity, creativity and relevance.actively participate in the social media A Nielsen study published in October Therefore, whatever the successfulrevolution. The growth of social media 2008 showed that almost one-third of formula turns out to be in terms of newand consumers’ willingness to generate home Internet use (31%) in the US is ad formats and a different approach toopinion and co-create content is a big accompanied by background TV viewing. ad inventory, the ingredients could formopportunity for traditional publishers to Furthermore, more than 80% of the ‘best practice’ for advertising acrossincrease audience and engagement on Americans who watched TV and used the all sectors – improving the success oftheir own sites. Internet in September 2008 used both online advertising everywhere.‘Internal’ - Increase interactivity within simultaneously. Although teenagers werethe publisher site the most likely to use both together, adults aged 35 to 54 actually logged thePublishers should instigate functionality most simultaneous Internet/TV usagethat enables communities and conversations form within their own sites. Thisdoesn’t mean creating a social networkinfrastructure but can be as straightforward News publishers Twitter followingsas allowing visitors to comment or Increasing numbers of news publishers – also seen as a casualty of growth in online mediacreate content related to material - have adapted from simply having websites to participating in social media through activeposted by the publisher. This enables use of sites like Twitter to drive awareness and conversation around their brands andtraditional publishers to become part of offerings. CNN and the New York Times have some of the largest followings on Twitter.the wider consumer conversation ratherthan just pushing content and sitting back. Figure 16: News publishers have considerable Twitter followings (and counting...)‘External’ – Participate in the conversationon social network sites Publisher Username Number of followersJust as consumers add content to social CNN Breaking News cnnbrk 323,258network sites, so can publishers. Socialnetworks offer the opportunity to The New York Times nytimes 208,032promote content to a wider audience BBC Click BBCClick 140,941across the web. Traditional publishers areamongst the most popular fan pages on Guardian Tech guardiantech 116,845Facebook, some having hundreds of Source: Twitterholic, 27th February 2009thousands of fans.13Copyright © 2009 The Nielsen Company
  15. 15. Conclusion: Social Networks provide the trigger to improve the potency of advertising across all forms of mediaThe social networking phenomenon is The Industry faces a huge predicament. This will involve a substantial trial anddramatically changing the way people The factors behind Facebook’s stunning error process and is only achievable if thebehave and, consequently, offers new growth – a focus on connecting through a social networks, advertisers and theirchallenges and opportunities to the simple and relatively advert-free design – agencies work more closely media and advertising industry haven’t attracted ad revenues consummate Whatever the successful ad model turnsalike. Social network and blogging sites with the size and engagement levels of its out to be, the messaging will have to benow account for almost 10% of all audience. On the other hand, MySpace’s authentic and humble, and built on theInternet time yet remains, with a few audience is flattening but its ad model – principle of a two-way conversation –exceptions, a largely un-monetised form built around a richer content offering, not a push model – that adds value toof media. The industry is still in its more in line with traditional online the consumer.infancy in regards to successfully publishing – is doing better at attracting If this magic formula is found, theadapting its traditional ‘modus operandi’ ad revenues. benefits could be truly incredible, havingto take advantage of this fundamental A magic formula to overcome this the potential to transform the potencychange in consumer behaviour. predicament and effectively monetise of advertising across all forms of mediaWhilst social networks provide significant online’s most heavily used sector, to connect with target audiences andcompetition for traditional publishers in hasn’t yet been found. However, a major overcome the current distrust consumersterms of consumer attention, they also ingredient will be a fundamentally new have with advertising.provide significant opportunities. approach to the online ad model inPublishers can improve engagement with terms of both ad units and ad inventory.their own audiences – by tapping intoconsumers’ increasing desire to createcontent – and can use social media tosyndicate their content beyond itstraditional confines to a much wideraudience. 14 Copyright © 2009 The Nielsen Company
  16. 16. About this report: The data and insights contained in this report come from the following Nielsen Online solutions.NetView: The Industry Benchmark for easy access and customization of BuzzMetrics: The global standard inInternet Audience Measurement AdRelevance data. Whether you buy, measuring consumer-generated mediaNetView tracks usage across Web sites and sell, create or analyze online advertising, (CGM)digital applications to deliver high-quality AdRelevance provides actionable, timely With solid data-mining technology, superbaudience data and analytics. Through information to build effective and efficient research and Nielsen’s unrivalled experience inmetered measurement of representative online marketing strategies media measurement and client services,panels of Internet users, NetView reports and ad campaigns BuzzMetrics helps today’s companies, brandsindustry-standard metrics—including and business professionals better understand Custom Research & Analytics: Linkingunique audience, page views and time the influence and impact of CGM on products, Consumer Attitudes and Behaviours forspent—as well as loyalty indicators, issues, reputation and image. Breakthrough Online Insightdemographic information and other key Nielsen Online’s powerful survey and Digital Strategic Services: Strategies andinsights into online activity and consumer research capabilities, e-commerce tracking, Tactics to Manage Online Exposure andbehaviour. demographic information and in-depth Grow Brand AdvocacyAdRelevance: Accurate Intelligence about analysis enable you to successfully Digital Strategic Services is a full-serviceOnline Advertising Activity maximize your global Internet marketing CGM consultancy that gives you theAdRelevance is the only online advertising investment and understand how consumers resources, analysis, advice and tactics tomeasurement system that mimics actual respond to products, services, brands and proactively exploit today’s digital opportu-Internet population usage by automatically promotions – both online and off. nities, so your brand’s advocacy-buildingadjusting itself to traffic patterns. An program can reach its full potential.intuitive, award-winning interface enables For more information on the report, or any of these solutions, please contact: International: USA: Alex Burmaster, Communications Director, UK & EMEA Nic Covey, Director of Insights +44 20 7014 0590 +1 312-385-6718About Nielsen Online: Nielsen Online, a service of The Nielsen Company, delivers comprehensive, independent measurementand analysis of online audiences, advertising, video, consumer-generated media, word of mouth, commerce and consumerbehavior. With high quality, technology-driven products and services, Nielsen Online enables clients to make informed businessdecisions regarding their Internet, digital and marketing strategies. For more information, please visit, visit our blog at CR-Nielsen: CR-Nielsen, partner of ChinaRank, is the Nielsen Company’s joint venture in China. CR-Nielsen is focusedon providing scientific and comprehensive traffic data analysis services, including online marketing analysis, online advertisingdelivery, marketing intelligence, competitive analysis, client orientation, website operation and other data services for commercialuse. For more information, please visit The Nielsen Company: The Nielsen Company is a global information and media company with leading marketpositions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement,trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in morethan 100 countries, with headquarters in New York, USA. For more information, please visit © 2009 The Nielsen CompanyAll rights reserved. Nielsen and the Nielsen logo are trade marks of The Nielsen Company.